New Labor Law After Bangladesh Factory Collapse

President Obama, EU demand better working conditions in Bangladesh
By Phoebe Ryles, Epoch Times
July 16, 2013 Updated: July 16, 2013

Bangladesh’s government passed new workers’ rights legislation July 15, three months after the historic Rena Plaza factory building collapse in Bangladesh killed over 1,100 garment workers in an instant, in an effort to appease foreign investors and prevent future accidents. President Barack Obama had announced a sanction against the country.

International and American demand for improved human rights and working conditions has been a key element in pressuring legislators for change in Bangladesh.

The legislation comes after the European Union (EU) threatened to suspend the country’s trade privileges unless steps were taken to improve workers’ situation.

Last month, President Obama suspended Bangladesh’s duty-free trade status, stating that the country had not shown significant improvement in protecting workers.

Unfortunately Obama’s move packed very little punch because garments, Bangladesh’s main export, will not be affected by the change.

“It’s encouraging to see human rights become an integral part of our foreign policy. However, sometimes we are bolder in the promotion of human rights in cases where economic trade is not that significant,” said James Gross, professor at the Department of Labor Relations, Law, and History at Cornell University.

Nearly 60 percent of Bangladesh’s exports go to Europe, where preferred trade status substantially reduces the import duty on garments, but only 22 percent go to the United States, according to the Observatory of Economic Complexity at MIT.

Bangladesh, the world’s second largest garment exporter, sent $4 billion dollars worth of goods to the United States in 2010, a fraction of the $332 billion dollars exported by China.

China, the world’s largest exporter and a virulent abuser of human rights, has avoided similar international trade actions because of the scale of its economy, nearly 30 times larger then that of Bangladesh.

The July 15 legislation is a step in the right direction for Bangladesh, however, how well the laws are enforced will determine their effectiveness.

The new law lifts some of the restrictions on union organizing in Bangladesh. Specifically, it ends the requirement that organizers provide the factory with a list of names of employees who have joined the union.

This requirement has been widely used by factory owners in Bangladesh to penalize workers for joining a union according to the AFL-CIO Solidarity Center.

After the Rena Plaza disaster workers in the factory were “threatened with the loss of pay if they refused to return to work, even though they worried about safety conditions,” the AFL-CIO stated.

A higher percentage of union membership generally correlates with better working conditions and fewer injuries.

In the United States, states with laws that discourage union membership have 34 percent to 40 percent more work related injuries, according to a University of Michigan study.

The new legislation also requires employers to contribute 5 percent of their annual profits to an employee welfare fund, according to Reuters.

While the United States and the EU were relatively quick to move in response to poor conditions in Bangladesh, nothing has been done to pressure China to improve its labor laws or working conditions despite ongoing human rights violations as well as major accidents this year.

“You are talking about a different magnitude of economy, trade and political consequences,” Gross said. “The real test would be the extent to which human rights can trump economic profit when it involves some of our major trading partners.”